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EXHIBIT 10.21
CREDIT AGREEMENT
Dated as of January 7, 1997
among
BROOKWOOD COMPANIES INCORPORATED,
▇▇▇▇▇▇ INDUSTRIES, INC.,
BROOKWOOD LAMINATING, INC.,
as Borrowers
and
THE BANK OF NEW YORK,
as Bank
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2. AMOUNT AND TERMS OF COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 Procedure for Opening Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.5 Payments in Respect of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.6 Creation of Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Termination or Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.8 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.9 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.10 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.11 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.12 Minimum Amounts And Maximum Number of Tranches . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.13 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.14 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.15 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.16 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.17 Letter of Credit Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.19 Borrowing Base Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.20 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.21 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.22 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.23 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.25 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.26 Reliance by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . 30
3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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3.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.12 Federal Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1 Conditions to Initial Loans, Letters of Credit and Acceptances . . . . . . . . . . . . . . . . . . . 35
4.2 Conditions to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4 Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . . . 41
5.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.1 Financial Condition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.8 Limitation on Consolidated Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.9 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.10 Limitation on Optional Payments and Modifications of Debt Instruments . . . . . . . . . . . . . . . 47
6.11 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.12 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.13 Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.14 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.15 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.16 Limitation on Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.17 Limitation on Receivables From Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.18 Limitation on Tax Sharing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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6.19 Amendments to Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.4 Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6 Successors and Assigns; Participation and Assignments. . . . . . . . . . . . . . . . . . . . . . . . 54
8.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.13 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Borrowing Base Compliance Certificate
Exhibit C - Form of Brookwood Pledge Agreement
Exhibit D - Form of Parent Pledge Agreement
Exhibit E - Form of Security Agreement
Exhibit F - Form of Subsidiary Guarantee
Exhibit G - Form of Bankers Acceptance Confirmation
Exhibit H - Form of Draft
Exhibit I-1 - Form of Opinion of Counsel to Borrowers
Exhibit I-2 - Form of Opinion of Counsel to Parent
Exhibit J - Form of Assignment and Acceptance
Exhibit K - Form of Assignment of Factor Balances
Exhibit L - Form of Notice of Assignment
SCHEDULES
Schedule 3.17 - Environmental Matters
Schedule 4.1(j) - Indebtedness to be Repaid
Schedule 6.2 - Indebtedness
Schedule 6.3 - Liens
Schedule 6.4 - Guarantee Obligations
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CREDIT AGREEMENT, dated as of January 7, 1997, among BROOKWOOD
COMPANIES INCORPORATED, a Delaware corporation ("Brookwood"), ▇▇▇▇▇▇
INDUSTRIES, INC., a Delaware corporation ("▇▇▇▇▇▇"), and BROOKWOOD LAMINATING,
INC., a Delaware corporation ("Laminating"; and together with Brookwood and
▇▇▇▇▇▇, the "Borrowers"), and THE BANK OF NEW YORK (the "Bank").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acceptance": a banker's acceptance created by the Bank pursuant to
the terms of subsection 2.6.
"Acceptance Commission": as defined in subsection 2.6(d).
"Acceptance Proceeds": as defined in subsection 2.6(d).
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the higher of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Rate in effect on such day plus
1/2 of 1%. For purposes hereof: "Prime Rate" means the rate of interest per
annum publicly announced from time to time by the Bank as its prime commercial
lending rate in effect at its principal office in New York City (the Prime Rate
not being intended to be the lowest rate of interest charged by the Bank in
connection with extensions of credit to debtors); and "Federal Funds Rate"
means, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions received
by the
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Bank from three federal funds brokers of recognized standing selected by it.
Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate or the Federal Funds Rate,
respectively.
"Alternate Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Alternate Base Rate.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Alternate Base Eurodollar
Rate Loans Loans
------------------------------------------------------------------
0.25% 2.25%
"Assignee": as defined in subsection 8.6(c).
"Assignment of Factor Balances": an Assignment of Factor Balances to
be executed and delivered by the applicable factor in respect of any Eligible
Factor Credit Balance, substantially in the form of Exhibit K, as the same may
be amended, supplemented or otherwise modified from time to time.
"Available Commitment": at any time, an amount equal to the excess, if
any, of the lesser of (a) the Maximum Amount and (b) the sum of (i) the
Borrowing Base minus (ii) the aggregate principal amount of all Loans then
outstanding minus (iii) the aggregate L/C Obligations at such time.
"Bank": as defined in the preamble hereto.
"Borrowers": as defined in the preamble hereto.
"Borrowing Base": as defined in subsection 2.1.
"Borrowing Base Compliance Certificate": a certificate signed by the
chief financial officer of Brookwood, substantially in the form of Exhibit B
hereto and appropriately completed, and containing such other supporting
documents and attachments as may be necessary to support the information
contained therein to the reasonable satisfaction of the Bank.
"Borrowing Date": any Business Day specified in a notice pursuant to
(a) subsection 2.2 or 2.11 as a date on which Brookwood requests the Bank to
make Loans, (b) subsection 2.3 as a date on which Brookwood requests the Bank
to issue a Letter of Credit or (c) subsection 2.6 as a date on which Brookwood
requests the Bank to create an Acceptance.
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"Brookwood": as defined in the preamble hereto.
"Brookwood Pledge Agreement": the Pledge Agreement dated as of the
date hereof to be executed and delivered by Brookwood, substantially in the
form of Exhibit C, as the same may be amended, supplemented or otherwise
modified from time to time.
"Business": as defined in subsection 3.17(d).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Stock": any and all shares, interests, participation or other
equivalents (however designated) of capital stock (including preferred stock)
of a corporation, any and all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) direct obligations of the United States of
America, or of any agency thereof, or obligations guaranteed as to principal
and interest by the United States of America, or of any agency thereof, in
either case maturing not more than 90 days from the date of acquisition
thereof; (b) certificates of deposit issued by any bank or trust company
organized under the laws of the United States of America or any state thereof,
and having capital, surplus and undivided profits of at least $500,000,000,
maturing not more than 90 days from the date of acquisition thereof; and (c)
commercial paper issued by the Bank, the parent corporation of the Bank or any
Subsidiary of the Bank's parent corporation and commercial paper rated A-1 or
better or P-1 by Standard & Poor's Ratings Group, a Division of McGraw Hill,
Inc., or ▇▇▇▇▇'▇ Investors Services, Inc., respectively, maturing not more than
90 days from the date of acquisition thereof; in each case so long as the same
(x) provide for the payment of principal and interest (and not principal alone
or interest alone) and (y) are not subject to any contingency regarding the
payment of principal or interest.
"Change in Law": the adoption of any law, rule, regulation, policy,
guideline or directive (whether or not having the force of law) or any change
therein or in the interpretation or application thereof by any Governmental
Authority, including, without limitation, the issuance of any final rule,
regulation or guideline by any regulatory agency having jurisdiction over the
Bank or, in the case of subsection 2.17 or 2.23, any corporation controlling
the Bank.
"Closing Date": the date on which the conditions precedent set forth
in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
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"Collateral": all assets of the Loan Parties, now owned or hereinafter
acquired, upon which a Lien is purported to be created by any Security
Document.
"Commercial L/C": a commercial documentary letter of credit under
which the Bank agrees to make payment in Dollars for the account of a Borrower
in respect of obligations of such Borrower or a Subsidiary thereof in
connection with the purchase of goods or services in the ordinary course of
business.
"Commitment": the obligation of the Bank to make Loans, issue Letters
of Credit and create Acceptances to or for the account of the Borrowers
hereunder in an aggregate principal amount at any one time outstanding not to
exceed the Maximum Amount, as such amount may be reduced from time to time in
accordance with the provisions of this Agreement.
"Commitment Period": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitment shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrowers within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrowers and which is
treated as a single employer under Section 414 of the Code.
"Consolidated Capital Expenditures": for any period, all amounts which
are set forth on the consolidated statement of cash flows of Brookwood and its
Subsidiaries for such period as the "purchase of property and equipment," in
accordance with GAAP.
"Consolidated EBITDA": for any period, the sum, for the Borrowers and
their Subsidiaries (determined on a consolidated basis in accordance with GAAP)
of (a) net income (before extraordinary and unusual items), plus (b) interest
expense, plus (c) tax expense, plus (d) depreciation expense (to the extent
deducted in determining net income), plus (e) amortization expense (to the
extent deducted in determining net income).
"Consolidated Fixed Charges": for any period, the sum, for the
Borrowers and their Subsidiaries (determined on a consolidated basis in
accordance with GAAP) of (a) interest expense, plus (b) cash taxes paid, plus
(c) scheduled principal amortization of Indebtedness (including the principal
portion of lease payments under Financing Leases), plus (d) Consolidated
Capital Expenditures, plus (e) Restricted Payments made to the Parent.
"Consolidated Indebtedness for Borrowed Money": for any period, the
aggregate amount of Indebtedness of Brookwood and its Subsidiaries described in
clauses (a)-(e) of the definition of "Indebtedness" contained in this
subsection 1.1.
"Consolidated Tangible Net Worth": as of any date of determination,
all items which in conformity with GAAP would be included under shareholders'
equity on a consolidated balance sheet of Brookwood and its Subsidiaries, after
deducting therefrom the following: (a)
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any surplus resulting from the write-up of assets after the date hereof, (b)
intangible assets, including (i) goodwill, including any amounts (however
designated on the balance sheet) representing the cost of acquisitions of
Subsidiaries in excess of underlying tangible assets, (ii) patents, trademarks
and copyrights and (iii) deferred charges (including, but not limited to,
unamortized debt discount and expense) and (c) leasehold improvements not
recoverable at the expiration of a lease.
"Consolidated Total Liabilities": for any period, all amounts which,
in accordance with GAAP, would appear as liabilities on the consolidated
balance sheet of Brookwood and its Subsidiaries.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Discount Charge": as defined in subsection 2.6(d).
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Draft": a draft drawn by a Borrower in the form of Exhibit H hereto,
or such other form as may be acceptable to the Borrowers and the Bank.
"Drawing": a drawing of one or more Drafts.
"Drawing Date": as defined in subsection 2.6(c).
"Eligible Factor Credit Balance": a Factor Credit Balance owing to a
Borrower as to which the following requirements have been fulfilled to the
satisfaction of the Bank: (i) such Factor Credit Balance is payable to a
Borrower and such Borrower has lawful and absolute title thereto; (ii) such
Factor Credit Balance shall have excluded therefrom (x) any portion that is
subject to any dispute, offset, reserve, counterclaim or any other claim or
defense on the part of the applicable factor or other obligor or to any claim
on the part of the applicable factor or other obligor denying liability under
such Factor Credit Balance known to any of the Borrowers and (y) discounts,
claims, credits and allowances; (iii) such Factor Credit Balance is evidenced
by a statement of account rendered to a Borrower by the applicable factor or
other obligor and none of such Factor Credit Balance is evidenced by any
chattel paper, promissory note or other instrument; (iv) none of such Factor
Credit Balance is subject to any Lien in favor of any Person other than the
Liens of the Bank hereunder; (v) none of the Borrowers is aware or has reason
to be aware of any reorganization, bankruptcy, receivership, custodianship,
insolvency or other like condition in respect of the applicable factor or other
obligor; (vi) such Factor Credit Balance is payable in Dollars and is due from
a factor or other obligor located in the United States; (vii) such Factor
Credit Balance is due from a factor that
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has executed and delivered to the Bank a Factor Intercreditor Agreement
covering such Factor Credit Balance; (viii) such Factor Credit Balance has not
been outstanding more than 90 days from the due date thereof; (ix) such Factor
Credit Balance is subject to a fully perfected first priority security interest
in favor of the Bank pursuant to the Security Agreement and the applicable
Assignment of Factor Balances; and (x) such Factor Credit Balance is a good and
valid account representing an undisputed bona fide indebtedness of the
applicable factor or other obligor, for a fixed sum as set forth in the
statement relating thereto.
"Eligible Inventory": as at any date, finished goods Inventory of
Brookwood's Roll Goods Division located at the Borrowers' premises at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ of ▇▇▇▇▇▇, Gardena, California or 36 ▇▇▇▇▇▇▇ Avenue,
Building 14, ▇▇▇▇▇▇, Rhode Island, valued at the lower of cost or market value,
determined on a first-in-first-out basis, which is not, in the good faith
exercise of the Bank's reasonable judgment, obsolete, slow moving or
unmerchantable and which the Bank, in the good faith exercise of its reasonable
discretion, shall not deem ineligible Inventory, based on such considerations
as the Bank may from time to time deem appropriate, including, without
limitation, whether the Inventory is subject to a perfected, first priority
security interest in favor of the Bank and whether the Inventory conforms to
all standards imposed by any Governmental Authority, division or department
thereof which has regulatory authority over such goods or the use or sale
thereof.
"Eligible Receivables": each Receivable arising in the ordinary course
of the Borrowers' businesses and which the Bank shall deem to be an Eligible
Receivable, based on such considerations as the Bank may from time to time deem
appropriate. A Receivable shall not be deemed eligible unless such Receivable
is subject to the Bank's perfected security interest and no other Lien, and is
evidenced by an invoice or other documentary evidence customarily issued by the
Borrowers in the ordinary course of business. In addition, no Receivable shall
be an Eligible Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate of such Borrower or to a Person controlled by an Affiliate of a
Borrower;
(b) the payment associated with such Receivable is unpaid
more than (i) 90 days after the due date or (ii) 150 days after the invoice
date.
(c) the account debtor shall (i) apply for, suffer, or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws or (viii) take any action for the purpose of effecting any
of the foregoing;
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(d) the sale is to an account debtor outside the
continental United States of America, unless the sale is on letter of credit,
guaranty or acceptance terms, in each case acceptable to the Bank in its sole
discretion;
(e) fifty percent (50%) or more of the Receivables from
such account debtor are deemed ineligible pursuant to clause (b) above;
(f) the Bank believes that collection of such Receivable
is insecure or that such Receivable may not be paid by reason of the account
debtor's financial inability to pay;
(g) the purchaser is the United States of America, any
state thereof or any department, agency or instrumentality of any of them,
unless the applicable Borrower assigns its right to payment of such Receivable
to the Bank pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub- Section 15 et seq.) or has
otherwise complied with other applicable statutes or ordinances;
(h) the goods giving rise to such Receivable have not
been shipped and delivered to and accepted by the account debtor or the
services giving rise to such Receivable have not been performed by the
applicable Borrower and accepted by the account debtor or the Receivable
otherwise does not represent a final sale;
(i) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, to the extent of such offset, deduction,
defense, dispute or counterclaim, or the Receivable is contingent in any
respect or for any reason;
(j) the Borrowers have made any agreement as to any
deduction therefrom, except for discounts or allowances made in the ordinary
course of business, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related thereto;
(k) shipment of the merchandise or the rendition of
services has not been completed;
(l) any return, rejection or repossession of the
merchandise has occurred, to the extent of such return, rejection or
repossession;
(m) such Receivable is not payable to one or more of the Borrowers; or
(n) such Receivable is not otherwise satisfactory to the
Bank as determined in good faith by the Bank.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, permits, guidelines or requirements of any Governmental Authority or
other Requirements of Law (including
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common law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, now, or as
hereafter may be, in effect.
"Equipment": all of the Borrowers' goods (other than Inventory)
whether now owned or hereafter acquired and wherever located, including,
without limitation, all equipment, machinery, apparatus, motor vehicles,
fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Lending Office": the office of the Bank which shall be
making or maintaining its Eurodollar Loans.
"Eurodollar Loans": loans the rate of interest applicable to which is
based upon the LIBOR Rate.
"Event of Default": any of the events specified in Section 7, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Existing Facility": as defined in subsection 3.16.
"Factor Credit Balance": as of any date, an amount equal to the stated
value of all monies, credit balances, reserves or other amounts held by any
factor on such date for the account of a Borrower, determined in accordance
with GAAP and in accordance with the agreements between such Borrower and such
factor.
"Factor Intercreditor Agreement": any intercreditor agreement
executed and delivered on the Closing Date by the Bank and a factor party to a
factoring agreement with any Borrower, as the same may be amended, supplemented
or otherwise modified from time to time.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
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"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counter indemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other third Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of
any such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided, however,
that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed
to be the lower of (a) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee Obligation,
unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by
such guaranteeing person in good faith.
"Guarantor": any Person delivering a Subsidiary Guarantee pursuant to
this Agreement.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all obligations of such Person under Financing
Leases, (d) all obligations of such Person upon which interest charges are
customarily paid, (e) all obligations of such Person in respect of letters of
credit or banker's acceptances issued or created for the account of such
Person, (f) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
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for the payment thereof and (g) all Guarantee Obligations of such Person in
respect of Indebtedness of others.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in subsection 3.9.
"Interest Payment Date": (a) as to any Alternate Base Rate Loan, the
last day of each March, June, September and December to occur while such Loan
is outstanding, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period,and (c) as to any
Eurodollar Loan having an Interest Period of six months, the day which is three
months after the first day of such Interest Period, and the last day of such
Interest Period.
"Interest Period": with respect to any Eurodollar Loan,
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by Brookwood in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by Brookwood by irrevocable notice to the Bank not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date;
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(iii) any Interest Period that begins on the last day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) if Brookwood shall fail to give notice as provided in
clause (b) above, it shall be deemed to have selected a conversion of
a Eurodollar Loan to an Alternate Base Rate Loan (which conversion
shall occur automatically and without need for compliance with the
conditions for conversion set forth in subsection 2.11).
"Inventory": shall mean all of the Borrowers' now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to
be furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in the
Borrowers' businesses or used in selling or furnishing such goods, merchandise
and other personal property, and all documents of title or other documents
representing them.
"▇▇▇▇▇▇": as defined in the preamble hereto.
"L/C Application": a letter of credit application in the Bank's then
customary form for the type of letter of credit requested.
"L/C Obligations": the aggregate outstanding face amount of all
Letters of Credit and Acceptances issued or created by the Bank hereunder plus
the aggregate outstanding Reimbursement Obligations.
"Laminating": as defined in the preamble hereto.
"Letter of Credit": a Commercial L/C or Standby L/C issued by the Bank
pursuant to the terms of subsection 2.3.
"LIBOR Rate": with respect to each Interest Period for a Eurodollar
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1% determined by the Bank to be equal to the quotient obtained by dividing
(a) the London Interbank Offered Rate for the selected Interest Period by (b) a
fraction equal to 1.00 minus the Eurocurrency Reserve Requirements as
determined on the date the LIBOR Rate is determined.
"Lien": any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any Financing Lease, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing).
"Loan": as defined in subsection 2.1.
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"Loan Documents": this Agreement, the Revolving Credit Note, the
Security Documents and any Subsidiary Guarantees.
"Loan Parties": the Borrowers, the Parent and any Guarantors.
"London Interbank Offered Rate": with respect to each Interest Period
for a Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to
the nearest 1/10 of 1%, quoted at approximately 11:00 A.M., London time, by the
Bank two Business Days prior to the first day of such Interest Period, for the
offering by the Bank to prime commercial banks in the London interbank market
of dollar deposits in immediately available funds for a period, and in an
amount, comparable to the Interest Period and principal amount, respectively,
of the Loan to bear interest at the LIBOR Rate.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise), results of
operations or prospects of the Borrowers and their respective Subsidiaries or
(b) the validity or enforceability of this or any of the other Loan Documents
or the rights or remedies of the Bank hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
pollutant, contaminant or hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maximum Amount": $14,000,000; except that between April 1st and June
30th of any year, such amount shall be $15,000,000.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes": as defined in subsection 2.24.
"Notice of Assignment": a Notice of Assignment to be delivered to the
applicable factor in respect of any Eligible Factor Credit Balance,
substantially in the form of Exhibit L, as the same may be amended,
supplemented or otherwise modified from time to time.
"Obligations": the unpaid principal of and interest on the Loans, the
L/C Obligations and all other obligations and liabilities of the Borrowers to
the Bank (including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, related to any Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Loans, the other Loan Documents, any Letter of Credit or L/C
Application, any Acceptance or any Acceptance Application or Draft, or any
other
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document made, delivered or given in connection therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to the Bank) or otherwise.
"Parent": The Hallwood Group Incorporated, a Delaware corporation.
"Parent Pledge Agreement": the Pledge Agreement dated as of the date
hereof to be executed and delivered by the Parent, substantially in the form of
Exhibit D, as the same may be amended, supplemented or otherwise modified from
time to time.
"Participant": as defined in subsection 8.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which any of the Borrowers or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to the Brookwood Pledge
Agreement and the Parent Pledge Agreement.
"Properties": as defined in subsection 3.17.
"Receivables": shall mean and include all of the Borrowers' accounts,
contract rights, instruments (including those evidencing indebtedness between
any Borrower and its respective Affiliates), documents, chattel paper, general
intangibles relating to accounts, drafts and acceptances, and all other forms
of obligations owing to any Borrower arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all guarantees and
other security therefor, whether secured or unsecured, now existing or
hereafter created, and whether or not specifically sold or assigned to the Bank
hereunder.
"Register": as defined in subsection 8.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligations": the aggregate obligations of the
Borrowers to reimburse the Bank for any payments made by the Bank under any
Letter of Credit that have not been reimbursed by the Borrowers in accordance
with subsection 2.5(a) plus the aggregate
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obligations of the Borrowers to pay the face amount of all Drafts drawn under
Acceptances created hereunder which have not been paid by the Borrowers on the
respective maturity dates thereof in accordance with subsection 2.6(i).
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC. Reg. Section
2615.
"Requirement of Law": as to any Person, the articles or certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Responsible Officer": the chief executive officer and the president
of the respective Borrower or, with respect to financial matters, the chief
financial officer of the respective Borrower.
"Restricted Payments": as defined in subsection 6.7.
"Revolving Credit Note": as defined in subsection 2.8(b).
"Security Agreement": the Security Agreement dated as of the date
hereof to be executed and delivered by the Borrowers, substantially in the form
of Exhibit E, as the same may be amended, supplemented or otherwise modified
from time to time.
"Security Documents": the collective reference to the Security
Agreement, the Pledge Agreements, the Assignments of Factor Balances, the
Notices of Assignment and the Factor Intercreditor Agreements, and all other
security documents hereafter delivered to the Bank granting a Lien on any asset
or assets of any Person to secure the obligations and liabilities of the
Borrowers hereunder and under any of the other Loan Documents or to secure any
guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby L/C": an irrevocable standby or direct pay letter of credit
under which the Bank agrees to make payments in Dollars for the account of a
Borrower in respect of obligations of such Borrower or a Subsidiary thereof
incurred pursuant to contracts made or performance undertaken, or to be
undertaken, or like matters relating to contracts to which such Borrower or a
Subsidiary thereof is or proposes to become a party in the ordinary course
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of such Borrower's or such Subsidiary's business, including, without
limitation, for insurance purposes or in respect of advance payments or as bid
or performance bonds.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of a Borrower.
"Subsidiary Guarantee": the Guarantee to be executed and delivered by
each Subsidiary of any Borrower formed or acquired after the date of this
Agreement, substantially in the form of Exhibit F, as the same may be amended,
supplemented or otherwise modified from time to time.
"Termination Date": January 7, 2000.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Loans shall originally have
been made on the same day).
"Transferee": as defined in subsection 8.6(f).
"Type": as to any Loan, its nature as an Alternate Base Rate Loan or a
Eurodollar Loan.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any other Loan Document or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP, as in effect from time to time; provided,
however, that for purposes of determining compliance with the covenants
contained in subsection 6.1, all accounting terms herein shall be interpreted
and all accounting determinations hereunder (in each case, unless otherwise
provided for or defined herein) shall be made in accordance with GAAP as in
effect on the date of this Agreement and applied on a basis consistent with the
application used in the financial statements referred to in subsection 3.1; and
provided, further, that if Brookwood notifies the Bank that the Borrowers wish
to amend any covenant in subsection 6.1 or any related definition to eliminate
the effect of any change in GAAP occurring after the date of this Agreement on
the operation of such covenant
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(or if the Bank notifies Brookwood that the Bank wishes to amend subsection 6.1
or any related definition for such purpose), then (i) Brookwood and the Bank
shall negotiate in good faith to agree upon an appropriate amendment to such
covenant and (ii) the Borrowers' compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective until such covenant is amended in a manner
satisfactory to the Borrowers and the Bank.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 Commitment. (a) Subject to the terms and conditions
hereof, the Bank agrees to make revolving credit loans ("Loans") to the
Borrowers from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed the lesser of (i)
the Maximum Amount minus the aggregate L/C Obligations at such time and (ii) an
amount equal to the sum of:
(A) up to 90% of Eligible Factor Credit Balances; plus
(B) up to 80% of Eligible Receivables; plus
(C) up to 50% of the value of Eligible Inventory;
provided, however, that the maximum amount of outstanding
Loans and L/C Obligations against Eligible Inventory shall not
exceed $2,000,000 in the aggregate at any time; plus
(D) up to 75% of the orderly liquidation value of
Equipment, as set forth in the appraisal delivered to the Bank
under subsection 4.1(q) or, from and after the date of
delivery thereof, the most recent appraisal delivered to the
Bank under subsection 5.2 (g); provided, however, that the
maximum amount of outstanding Loans and L/C Obligations
against Equipment shall not exceed $1,500,000 in the aggregate
at any time; minus
(E) the aggregate L/C Obligations at such time; minus
(F) such reserves as the Bank may reasonably deem proper
and necessary from time to time.
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The amount derived from (x) the sum of subsections 2.1(a)(ii) (A), (B), (C),
and (D) minus (y) subsection 2.1(a) (ii)(F) at any time and from time to time
shall be referred to as the "Borrowing Base". During the Commitment Period the
Borrowers may use the Commitment by borrowing, prepaying the Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions
hereof.
(b) The Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as
determined by the Borrowers and notified to the Bank in accordance with
subsections 2.2 and 2.11, provided that no Loan shall be made as a Eurodollar
Loan after the day that is one month prior to the Termination Date.
2.2 Procedure for Borrowing. The Borrowers may borrow
under the Commitment during the Commitment Period on any Business Day, provided
that Brookwood shall give the Bank irrevocable notice (which notice must be
received by the Bank prior to 11:00 A.M., New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans or (b) the same Business
Day as the requested Borrowing Date if the borrowing is to be solely of
Alternate Base Rate Loans), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, Alternate Base Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the length of the initial Interest Period
therefor. Each borrowing under the Commitment shall be in an amount equal to
(x) in the case of Alternate Base Rate Loans, $50,000 or a whole multiple of
$10,000 in excess thereof (or, if the then Available Commitment is less than
$50,000, such lesser amount) and (y) in the case of Eurodollar Loans, $300,000
or a whole multiple of $100,000 in excess thereof. Each Loan will be made
available to the Borrowers by the Bank crediting the account of Brookwood on
its books with the amount of the Loan.
2.3 Issuance of Letters of Credit. (a) Subject to the
terms and conditions hereof, Brookwood may from time to time during the
Commitment Period request the Bank to issue a Letter of Credit, which may be
either a Standby L/C or a Commercial L/C, for the account of any Borrower by
delivering to the Bank at its address specified in subsection 8.2 an L/C
Application completed to the satisfaction of the Bank, together with the
proposed form of the Letter of Credit (which shall comply with the applicable
requirements of paragraph (b) below) and such other certificates, documents and
other papers and information as the Bank may reasonably request.
(b) Each Letter of Credit issued hereunder shall,
among other things, (i) be in such form requested by Brookwood as shall be
acceptable to the Bank in its sole discretion, (ii) provide for (A) the payment
of sight drafts when presented for honor thereunder in accordance when the
terms thereof or (B) the acceptance and payment of Drafts drawn on the Bank in
accordance with subsection 2.6, and when accompanied by the documents described
therein and (iii) have an expiry date not later than (A) six months after the
date of issuance, in the case of a Commercial L/C (provided that, at the
request of Brookwood and upon the consent, in its sole and absolute discretion,
of the Bank, such expiry date may be up
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to 12 months after the date of issuance of such Commercial L/C), and (B) 12
months after the date of issuance, in the case of a Standby L/C (provided that,
at the request of Brookwood, any Standby L/C may contain terms providing for
its automatic renewal for an additional terms not to exceed the shorter of the
original term of such Standby L/C or 12 months unless that Bank provides to
Brookwood written notice of its intention not to renew such Standby L/C at
least 60 days prior to the expiration of the original term thereof), but in no
event shall any Letter of Credit have an expiry date later than the Termination
Date. Each L/C Application and each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof and, to the extent not inconsistent therewith, the laws of the
State of New York.
2.4 Procedure for Opening Letters of Credit. Upon
receipt of any L/C Application from Brookwood in respect of a Letter of Credit,
the Bank will process such L/C Application, and the other certificates,
documents and other papers delivered to the Bank in connection therewith, in
accordance with its customary procedures and, subject to the terms and
conditions hereof, promptly open such Letter of Credit by issuing the original
of such Letter of Credit to the beneficiary thereof and by furnishing a copy
thereof to Brookwood; provided that no such Letter of Credit shall be issued if
(a) the amount of such requested Letter of Credit, together with the amount of
the L/C Obligations outstanding at the time of such request, would exceed
$1,500,000, (b) the aggregate outstanding principal amount of the Loans plus
the outstanding L/C Obligations (after giving effect to the issuance of the
requested Letter of Credit) would exceed the lesser of (i) the Maximum Amount
and (ii) the Borrowing Base then in effect or (c) subsection 2.1 would be
violated thereby.
2.5 Payments in Respect of Letters of Credit. (a) Each
Borrower jointly and severally agrees, forthwith upon demand by the Bank and
otherwise in accordance with the terms of the L/C Application relating thereto
(i) to reimburse the Bank for any payment made by the Bank under any Letter of
Credit and (ii) to pay interest on the unreimbursed portion of any such payment
from the date of such payment until reimbursement in full thereof at a rate per
annum equal to (A) prior to the date which is one Business Day after the day on
which the Bank demands reimbursement from the Borrowers for such payment, the
Alternate Base Rate plus the Applicable Margin for Alternate Base Rate Loans
and (B) on such date and thereafter, the Alternate Base Rate plus the
Applicable Margin for Alternate Base Rate Loans plus 2.00%.
(b) The Borrowers shall be bound by the Bank's
(or any negotiating bank's or other correspondent's) regulations and good faith
interpretations of any Letter of Credit issued hereunder, notwithstanding that
such interpretation may be different from any Borrower's own interpretation
thereof. The payment obligations of the Borrowers under this Agreement with
respect to the Letters of Credit shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) the existence of any claim, set-off,
defense or other right which any Borrower or any Subsidiary may have at any
time against any beneficiary, or any
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transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or transferee may be acting), the Bank or any other Person, whether
in connection with this Agreement, the other Loan Documents, the transactions
contemplated herein or therein, or any unrelated transaction;
(ii) any statement or any other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iii) payment by the Bank under any Letter
of Credit against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit, except where such payment constitutes
gross negligence or wilful misconduct on the part of the Bank; or
(iv) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing, except for any such
circumstances or happening constituting gross negligence or wilful misconduct
on the part of the Bank.
2.6 Creation of Acceptances. (a) Subject to the terms
and conditions hereof, Brookwood may from time to time during the Commitment
Period request the Bank to create an Acceptance for the account of any
Borrower. Each Acceptance shall be created by the Bank's acceptance and
discounting of Drafts drawn on it in accordance with the terms of this
Agreement; provided that no such Acceptance shall be created if (i) the amount
of such requested Acceptance, together with the amount of the L/C Obligations
outstanding at the time of such request, would exceed $1,500,000, (ii) the
aggregate outstanding principal amount of the Loans plus the outstanding L/C
Obligations (after giving effect to the creation of the requested Acceptance)
would exceed the lesser of (1) the Maximum Amount and (2) the Borrowing Base
then in effect, or (iii) subsection 2.1 would be violated thereby.
(b) Whenever a Borrower desires that the Bank accept and
discount a Draft, Brookwood shall make such request to the Bank by telephone,
specifying (i) the face amount of such Draft, (ii) the maturity date of such
Draft, which shall be a Business Day not less than 30 days or more than 180
days after the date of drawing (provided that no Acceptance shall mature later
than the Termination Date), (iii) the day on which the acceptance and
discounting of such Draft is to occur, and (iv) the date, type, purchase price
and location of shipment and of destination of the goods, the importation,
exportation or domestic shipment of which is being financed by such Draft.
Each such request shall be confirmed by the delivery to the Bank, within one
Business Day of such request, of a written confirmation in the form of Exhibit
G hereto, with all the blanks and other information appropriately completed;
provided, however, that in the event of any conflict between any request and
the written confirmation thereof, such request shall govern if the Bank has
acted in reliance thereon.
(c) To facilitate the creation of Acceptances, the
Borrowers shall deliver to the Bank a supply of Drafts duly executed on behalf
of the applicable Borrower but with the face amount, maturity date and other
details left blank. In the event that any signatory whose
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signature appears on any Draft accepted and discounted by the Bank shall cease
to be an authorized signatory on or prior to the date on which such Draft is
accepted and discounted by the Bank, the obligations of the Borrowers hereunder
and with respect to such Draft shall nevertheless be valid and enforceable for
all purposes as if such signatory had been an authorized signatory on such
date.
(d) Upon the Bank's receipt of a request, pursuant to
paragraph (b) above, to accept and discount a Draft, the Bank is hereby
authorized and directed to (i) fill in the face amount and maturity date of
such Draft and other necessary information, (ii) if the supply of Drafts
delivered to the Bank by the Company pursuant to paragraph (c) above has been
exhausted, execute such Draft pursuant to the power of attorney granted to the
Bank pursuant to paragraph (e) below, (iii) accept and discount such Draft, and
(iv) credit the account of the Borrowers maintained at the Bank in immediately
available funds in an amount equal to the Acceptance Proceeds (as defined
below) of such Draft.
The Borrowers understand and agree that the actual
crediting of the account of the Borrowers maintained at the Bank with the
Acceptance Proceeds of any Draft shall constitute conclusive evidence that such
Draft was accepted and discounted by the Bank, and the failure of the Bank to
send to the applicable Borrower an advice of such credit or to note such credit
in the monthly statement sent to the Borrowers in connection with such account
shall not affect any obligation of the Borrowers under this Agreement.
"Acceptance Proceeds" shall mean, in respect of any
Draft, an amount equal to the face amount thereof less the sum of (i) the
banker's acceptance discount rate for such maturity then being generally quoted
by the Bank (unless a different discount rate was quoted by the Bank in
connection with such request and was accepted by Brookwood, in which case such
quoted rate shall control) (the "Discount Charge"), the Discount Charge being
calculated on the face amount of each Draft so accepted for the actual number
of days in the period from the date thereof to the date of its maturity and on
the basis of a year of 360 days and (ii) a per annum acceptance commission (the
"Acceptance Commission") equal to 2.0% of the face amount of each Draft.
(e) The Borrowers hereby make, constitute and appoint the
Bank, and any successor thereto, acting singly, with full power of
substitution, as the true and lawful attorney-in-fact of the Borrowers in the
Borrowers' name, place and stead, if the supply of Drafts delivered to the Bank
by the Borrowers pursuant to paragraph (c) above has been exhausted, to execute
Drafts which any Borrower has requested, and the Bank has agreed, to accept and
discount. The power of attorney set forth in this paragraph (e) shall be
deemed coupled with an interest and shall be irrevocable. Each Borrower hereby
(i) ratifies and confirms all that its attorney-in-fact may do pursuant to the
power of attorney granted pursuant to this paragraph (e) and (ii) agrees that
the obligations of such Borrower hereunder and with respect to each Draft
executed by its attorney-in-fact pursuant to such power of attorney shall be
valid and enforceable as if each such Draft had been executed on behalf of such
Borrower by an authorized signatory thereof.
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(f) The applicable Borrower shall provide to the Bank,
with respect to each Draft, such additional information as the Bank shall
request, including, without limitation, shipping documents (or copies thereof)
covering the goods, the importation, exportation or domestic shipment of which
is being financed by such Draft.
(g) Notwithstanding the foregoing, the Bank shall not be
obligated to create any Acceptance hereunder if such Acceptance would not be
eligible for discount at a Federal Reserve Bank under applicable rules or
regulations, would not meet the requirements of paragraph 7 of Section 13 of
the Federal Reserve Act, as amended, or any liability of the Bank that would
arise from the creation of such Acceptance would constitute a deposit for which
the Bank would be required to maintain reserves under Regulation D of the
Federal Reserve Board as from time to time in effect. The Borrowers
acknowledge that the Bank's decision to accept and discount any Draft offered
for acceptance and discount hereunder will be made in reliance upon the truth
of the representations made by the applicable Borrower in paragraph (h) below
establishing the eligibility for discount of any such Acceptance. The
Borrowers will jointly and severally indemnify and hold the Bank harmless from
any loss or liability incurred by the Bank, directly or indirectly, if any
Acceptance is determined to be ineligible for discount or subject to reserves
by reason of any misrepresentation made by such Borrower (including, without
limitation, any costs or expenses arising in any manner from the illiquidity of
the market for ineligible bankers' acceptances).
(h) With respect to each Draft which any Borrower shall
request the Bank to accept and discount, (i) such Draft shall grow out of one
or more transactions involving the importation, exportation or domestic
shipment of goods, (ii) prior to any request that the Bank accept and discount
such Draft, such Borrower shall have entered into a contract or contracts
specifically providing for the transaction or transactions to which such Draft
relates having an aggregate value not less than the face amount of such Draft,
(iii) completion of the transaction or transactions to which such Draft relates
shall be scheduled to occur on or before the maturity date of such Draft, (iv)
the maturity of such Draft shall be consistent with the period usually and
reasonably necessary to finance transactions similar to the transaction or
transactions to which such Draft relates, and the proceeds of such transaction
or transactions shall be used to liquidate the credit created by the Bank's
acceptance and discounting of such Draft, (v) no Borrower shall have
outstanding any other financing of the transaction or transactions to which
such Draft relates, and (vi) such Borrower will be either (A) the importer or
exporter of the goods, the importation or exportation of which is being
financed by such Draft or (B) the buyer or seller of the goods, the domestic
shipment of which is being financed by such Draft.
(i) Each Borrower jointly and severally unconditionally
agrees to pay to the Bank the face amount of each Draft as to which an
Acceptance was created on the maturity date thereof, or on such earlier date as
may be required pursuant to the provisions of this Agreement. Acceptances may
not be prepaid.
(j) If any payment of principal of or interest (to the
extent permitted by law) on any Acceptance is not made when due (whether by
acceleration or otherwise), such overdue
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amount shall bear interest (computed on the basis of a year of 360 days and
actual days elapsed) from the date such overdue amount was due until paid in
full, payable on demand, at a rate per annum equal to the sum of (i) the
Alternate Base Rate, plus (ii) the Applicable Margin for Alternate Base Rate
Loans plus (iii) two percent (2%).
2.7 Termination or Reduction of Commitment. The
Borrowers shall have the right, upon not less than three Business Days' notice
by Brookwood to the Bank, to terminate the Commitment or, from time to time, to
reduce the amount of the Commitment. Upon such termination, the Borrowers
shall prepay the aggregate outstanding principal balance of the Loans. The
Borrowers may not terminate the Commitment if there are at such time any
outstanding L/C Obligations. Any such reduction shall be in an amount equal to
$500,000 or a whole multiple of $100,000 in excess thereof and shall reduce
permanently the Commitment then in effect. Upon such reduction, the Borrowers
shall prepay the excess, if any, of the outstanding principal amount of the
Loans and outstanding L/C Obligations over the amount of the Commitment as so
reduced; provided, however, that in no event may the Commitment be reduced to
an amount less than the outstanding L/C Obligations.
2.8 Repayment of Loans; Evidence of Debt. (a) The
Borrowers jointly and severally unconditionally promise to pay to the Bank the
then unpaid principal amount of each Loan on the Termination Date (or such
earlier date on which the Loans become due and payable pursuant to Section 7).
The Borrowers jointly and severally further agree to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 2.13.
(b) The Loans made by the Bank shall be evidenced by a
promissory note of the Borrowers, substantially in the form of Exhibit A (the
"Revolving Credit Note"), payable to the order of the Bank and evidencing the
obligation of the Borrowers to pay a principal amount equal to the lesser of
(i) the amount of the initial Commitment of the Bank and (ii) the aggregate
unpaid principal amount of all Loans made by the Bank. The Bank is hereby
authorized to record the date and amount of each Loan made by the Bank and the
date and amount of each payment or prepayment of principal thereof on the
schedule annexed to and constituting a part of the Revolving Credit Note, and
any such recordation shall constitute prima facie evidence of the accuracy of
the information so recorded. The Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Termination Date and (z) provide
for the payment of interest in accordance with subsection 2.13.
(c) Upon and after the occurrence and declaration of an
Event of Default and during the continuation thereof, the Borrowers will cause
cash to be deposited and maintained in an account with the Bank, as cash
collateral, in an amount equal to the L/C Obligations at such time, and the
Borrowers hereby irrevocably authorize the Bank, in its discretion, on the
Borrowers' behalf and in the Borrowers' names to open such an account and to
make and maintain deposits therein, or in an account opened by the Borrowers in
the amounts required to be made by the Borrowers, out of the proceeds of
Receivables or out of any other funds of the Borrowers coming into the Bank's
possession at any time. The Bank will invest such cash
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collateral (less applicable reserves) in such short-term money-market items as
to which the Bank and the Borrowers mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. The Borrowers may not withdraw amounts credited to any such
account except upon payment and performance in full of all such obligations and
termination of this Agreement or, if earlier, the date such Event of Default is
no longer continuing.
2.9 Optional Prepayments. The Borrowers may at any time
and from time to time prepay Loans, in whole or in part, without premium or
penalty, upon notice given by Brookwood to the Bank three Business Days prior
to the prepayment date, in the case of Eurodollar Loans, or prior to 10:00
A.M., New York City time, on the same Business Day, in the case of Alternate
Base Rate Loans; provided, however, that Eurodollar Loans may only be prepaid
on the last day of the applicable Interest Period. Each notice of prepayment
shall be irrevocable and shall specify the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans, Alternate Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (a) all accrued
interest on the amount being prepaid through the date of prepayment and (b) any
amounts payable pursuant to subsection 2.25.
2.10 Mandatory Prepayments. The Borrowers shall prepay
the Loans from time to time by the amount equal to the excess, if any, of the
outstanding principal amount of the Loans and the aggregate L/C Obligations at
such time over the Borrowing Base set forth in the most recently delivered
Borrowing Base Compliance Certificate. Such amount shall be due and payable on
the date that such excess arises, and such mandatory prepayment shall include
all accrued interest on the amount being prepaid through the date of prepayment
and any amounts payable pursuant to subsection 2.25.
2.11 Conversion and Continuation Options. (a) The
Borrowers may elect from time to time to convert Eurodollar Loans by giving the
Bank at least two Business Days' prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrowers may elect
from time to time to convert Alternate Base Rate Loans to Eurodollar Loans by
giving the Bank at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. All or any
part of outstanding Eurodollar Loans and Alternate Base Rate Loans may be
converted as provided herein, provided that (i) no Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and
the Bank has determined that such a conversion is not appropriate and (ii) no
Loan may be converted into a Eurodollar Loan after the date that is one month
prior to the Termination Date.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
Brookwood giving notice to the Bank, in accordance with the applicable
provisions of the term "Interest Period" set forth in
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subsection 1.1, of the length of the next Interest Period to be applicable to
such Loan, provided that no Eurodollar Loan may be continued as such (i) when
any Event of Default has occurred and is continuing and the Bank has determined
that such a continuation is not appropriate or (ii) after the date that is one
month prior to the Termination Date and, provided, further, that if Brookwood
shall fail to give such notice or if such continuation is not permitted, such
Loan shall be automatically converted to an Alternate Base Rate Loan on the
last day of such then expiring Interest Period.
2.12 Minimum Amounts And Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of each Eurodollar Loan Tranche shall be equal to $250,000 or a whole
multiple of $50,000 in excess thereof. In no event shall there be more than
six Eurodollar Loan Tranches.
2.13 Interest Rates and Payment Dates. (a) Each
Eurodollar Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the LIBOR Rate determined for
such day plus the Applicable Margin for Eurodollar Loans.
(b) Each Alternate Base Rate Loan shall bear interest at
a rate per annum equal to the Alternate Base Rate plus the Applicable Margin
for Alternate Base Rate Loans.
(c) Upon and after the occurrence of an Event of Default,
and during the continuation thereof, the outstanding Obligations shall bear
interest at a rate per annum equal to the sum of (i) the Alternate Base Rate,
plus (ii) the Applicable Margin for Alternate Base Rate Loans plus (iii) two
percent (2.00%).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.14 Commitment Fee. The Borrowers jointly and severally
agree to pay to the Bank a commitment fee for the period from and including the
first day of the Commitment Period to the Termination Date, computed at the
rate of 3/8ths of 1% per annum on the average daily amount of the Available
Commitment during the period for which payment is made, payable (a) quarterly
in arrears on the last day of each March, June, September and December, (b) on
the date of each reduction of the Commitment and (c) on the Termination Date or
such earlier date as the Commitment shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
2.15 Letter of Credit Fees. (a) The Borrowers jointly
and severally agree to pay to the Bank a Letter of Credit fee, (i) with respect
to each Standby L/C, on the average outstanding amount available to be drawn
under each Standby L/C at a rate per annum equal to two percent (2.00%),
payable in arrears, on the last day of each fiscal quarter of the Borrowers and
on the Termination Date and (ii) with respect to each Commercial L/C, the
standard fees,
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commissions and charges of the Bank, which fees, commissions and charges shall
be payable on the date such Commercial L/C is issued.
(b) In addition to the foregoing fees, charges
and commissions, the Borrowers shall pay or reimburse the Bank for such normal
and customary costs and expenses as are incurred or charged by the Bank in
issuing, effecting payment under, amending or otherwise administering any
Letter of Credit.
2.16 Computation of Interest and Fees. (a) Commitment
fees, Letter of Credit fees, interest on the Loans and the Acceptance
Commission with respect to Acceptances shall be calculated on the basis of a
360-day year for the actual days elapsed. The Bank shall as soon as
practicable notify Brookwood of each determination of a LIBOR Rate. Any change
in the interest rate on a Loan resulting from a change in the Alternate Base
Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The
Bank shall as soon as practicable notify Brookwood of the effective date and
the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Bank
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers in the absence of manifest error. The Bank shall, at the request
of the Borrowers, deliver to Brookwood a statement showing the quotations used
by the Bank in determining any interest rate pursuant to paragraph (a) above.
2.17 Letter of Credit Reserves. (a) If any Change in Law
after the date of this Agreement shall either (i) impose, modify, deem or make
applicable any reserve, special deposit, assessment or similar requirement
against Letters of Credit issued by the Bank or (ii) impose on the Bank any
other condition regarding this Agreement or any Letter of Credit, and the
result of any event referred to in clause (i) or (ii) above shall be to
increase the cost to the Bank of issuing or maintaining any Letter of Credit
(which increase in cost shall be the result of the Bank's reasonable allocation
of the aggregate of such cost increase resulting from such events), then, upon
demand by the Bank, the Borrowers shall immediately pay to the Bank, from time
to time as specified by the Bank, additional amounts which shall be sufficient
to compensate the Bank for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin for Alternate
Base Rate Loans. A certificate setting forth any amount which the Bank is
entitled to receive pursuant to this subsection 2.17(a) shall be conclusive,
absent manifest error, as to the amount thereof. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Letters of Credit and all other amounts payable hereunder.
(b) If any Change in Law after the date of this
Agreement shall, in the opinion of the Bank, require that any obligation under
any Letter of Credit be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Bank or any corporation controlling the Bank, and such Change in Law shall
have the effect of reducing the rate of return on the Bank's or such
corporation's capital,
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as the case may be, as a consequence of the Bank's obligations under such
Letter of Credit to a level below that which the Bank or such corporation, as
the case may be, could have achieved but for such Change in Law (taking into
account the Bank's or such corporation's, as the case may be, policies with
respect to capital adequacy) by an amount deemed by the Bank to be material,
then from time to time following notice by the Bank to Brookwood of such Change
in Law, within 15 days after demand by the Bank, the Borrowers shall pay to the
Bank such additional amount or amounts as will compensate the Bank or such
corporation, as the case may be, for such reduction. If the Bank becomes
entitled to claim any additional amounts pursuant to this subsection 2.17(b),
it shall promptly notify Brookwood of the event by reason of which it has
become so entitled. A certificate setting forth any amounts which the Bank is
entitled to receive pursuant to this subsection 2.17(b) shall be conclusive,
absent manifest error, as to the amount thereof. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Letters of Credit and all other amounts payable hereunder.
2.18 Further Assurances. The Borrowers hereby agree, from
time to time, to do and perform any and all acts and to execute any and all
further instruments reasonably requested by the Bank to effect more fully the
purposes of this Agreement and the issuance of Letters of Credit hereunder.
2.19 Borrowing Base Compliance. The Bank or another
financial institution satisfactory to the Bank (including any Affiliate of the
Bank) shall, as it reasonably deems to be necessary from time to time during
the Commitment Period, review and confirm the information set forth in each
Borrowing Base Compliance Certificate delivered by Brookwood in order to
determine whether, at such time, the Borrowers are in compliance with the
requirements in respect of the Borrowing Base under this Agreement, and the
Borrowers shall reimburse the Bank for its reasonable out- of-pocket expenses
in respect thereof. If the Borrowers are not in compliance with such
requirements, the Bank shall promptly notify Brookwood of such noncompliance
and the Borrowers shall immediately (and in any event within one Business Day
of receipt of such notice) make all mandatory prepayments required pursuant to
subsection 2.10.
2.20 Inability to Determine Interest Rate. If prior to
the first day of any Interest Period:
(a) the Bank shall have determined (which determination
shall be conclusive and binding upon the Borrowers) that, by reason of
circumstances affecting the interbank eurodollar market generally,
adequate and reasonable means do not exist for ascertaining the LIBOR
Rate for such Interest Period, or
(b) the Bank shall have determined that the LIBOR Rate
determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost (as conclusively certified by
the Bank) of making or maintaining the affected Loans during such
Interest Period by reason of circumstances affecting the interbank
eurodollar market generally, or
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(c) dollar deposits in the relevant amount and for the
relevant period with respect to any such Eurodollar Loan are not
available to the Bank in its Eurodollar Lending Office's interbank
eurodollar market,
the Bank shall give telecopy or telephonic notice thereof to Brookwood as soon
as practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
Alternate Base Rate Loans, (y) any Loans that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be converted to
or continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar
Loans shall be converted, on the first day of such Interest Period, to
Alternate Base Rate Loans. Until such notice has been withdrawn by the Bank,
no further Eurodollar Loans shall be made or continued as such, nor shall the
Borrowers have the right to convert Loans to Eurodollar Loans.
2.21 Payments. All payments (including prepayments) to be
made by the Borrowers hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set-off or counterclaim and shall be
made prior to 12:00 Noon, New York City time, on the due date thereof to the
Bank, at the Bank's office specified in subsection 8.2, in Dollars and in
immediately available funds. If any payment hereunder becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
All of the Obligations are joint and several obligations of each Borrower.
2.22 Illegality. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for the Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of the Bank hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert Alternate Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) the Bank's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Alternate Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrowers shall pay
to the Bank such amounts, if any, as may be required pursuant to subsection
2.25.
2.23 Requirements of Law. (a) If any Change in Law after
the date of this Agreement or compliance by the Bank with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:
(i) shall subject the Bank to any tax of any kind whatsoever
with respect to this Agreement, the Revolving Credit Note or
any Eurodollar Loan made by it, or change the basis of
taxation of payments to the Bank in respect thereof (except
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for Non-Excluded Taxes covered by subsection 2.24 and changes
in the rate of tax on the overall net income of the Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of
the Bank which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank, by
an amount which the Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrowers shall
promptly pay the Bank such additional amount or amounts as will compensate the
Bank for such increased cost or reduced amount receivable.
(b) If the Bank shall have determined that any Change in
Law regarding capital adequacy or in the interpretation or application thereof
or compliance by the Bank or any corporation controlling the Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on the Bank's or
such corporation's capital as a consequence of its obligations hereunder to a
level below that which the Bank or such corporation could have achieved but for
such Change in Law, (taking into consideration the Bank's or the corporation's,
as the case may be, policies, with respect to capital adequacy) by an amount
deemed by the Bank to be material, then from time to time following notice by
the Bank to Brookwood of such Change in Law, within 15 days after demand by the
Bank, the Borrowers shall pay to the Bank such additional amount or amounts as
will compensate the Bank or such corporation, as the case may be, for such
reduction.
(c) If the Bank becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify Brookwood of the
event by reason of which it has become so entitled. A certificate setting
forth any additional amounts payable pursuant to this subsection shall be
conclusive, absent manifest error, as to the amount thereof. The agreements in
this subsection shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
2.24 Taxes. All payments made by the Borrowers under this
Agreement and the Revolving Credit Note shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank
as a result of a present or former connection between the Bank and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein
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(other than any such connection arising solely from the Bank having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or the Revolving Credit Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Bank hereunder or under the Revolving Credit Note, the
amounts so payable to the Bank shall be increased to the extent necessary to
yield to the Bank (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified
in this Agreement. Whenever any Non-Excluded Taxes are payable by the
Borrowers, as promptly as possible thereafter Brookwood shall send to the Bank
a certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fail to remit to the Bank the
required receipts or other required documentary evidence, the Borrowers shall
indemnify the Bank for any incremental taxes, interest or penalties that may
become payable by the Bank as a result of any such failure. The agreements in
this subsection shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
2.25 Indemnity. The Borrowers agree to indemnify the Bank
and to hold the Bank harmless from any loss or expense which the Bank may
sustain or incur as a consequence of (a) default by the Borrowers in making a
borrowing of, conversion into or continuation of Eurodollar Loans after
Brookwood has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrowers in making any
prepayment after Brookwood has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
the Bank) which would have accrued to the Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.26 Reliance by Bank. The Borrowers agree that the Bank
may rely on any telephonic or telecopy notice given by any Person, relating to
any Loan, Letter of Credit, Acceptance or any other matter to which the
Borrowers may give notice to the Bank under the provisions of this Section,
that the Bank in good faith believes is an authorized representative of any of
the Borrowers without the necessity of independent investigation, and in the
event any such notice by telephone conflicts with any written confirmation,
such telephonic notice shall govern if the Bank has acted in reliance thereon.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make
Loans, issue Letters of Credit and create Acceptances, each of the Borrowers
hereby represents and warrants to the Bank that:
3.1 Financial Condition. The consolidated balance sheet
of Brookwood and its consolidated Subsidiaries as at July 31, 1995 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Deloitte & Touche, copies of which have
heretofore been furnished to the Bank, are complete and correct and present
fairly the consolidated financial condition of Brookwood and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of Brookwood and its consolidated
Subsidiaries as at September 30, 1996 and the related unaudited consolidated
statements of income and of cash flows for the nine-month period ended on such
date, certified by a Responsible Officer, copies of which have heretofore been
furnished to the Bank, are complete and correct and present fairly the
consolidated financial condition of Brookwood and its consolidated Subsidiaries
as at such date, and the consolidated results of their operations and their
consolidated cash flows for the nine-month period then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by
such accountants or Responsible Officers, as the case may be, and as disclosed
therein). Neither Brookwood nor any of its consolidated Subsidiaries had, at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in the foregoing statements or in the notes thereto.
During the period from September 30, 1996 to and including the date hereof
there has been no sale, transfer or other disposition by either Brookwood or
any of its consolidated Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated financial condition of Brookwood and its consolidated Subsidiaries
at September 30, 1996.
3.2 No Change. (a) Since July 31, 1995 there has been
no development or event which has had or could have a Material Adverse Effect,
and (b) except as permitted by subsection 6.7(a), during the period from July
31, 1995 to and including the date hereof no dividends or other distributions
have been declared, paid or made upon the Capital Stock of any of the Borrowers
nor has any of the Capital Stock of any of the Borrowers been redeemed,
retired, purchased or otherwise acquired for value by any of the Borrowers or
any of their Subsidiaries.
3.3 Corporate Existence; Compliance with Law. Each of
the Borrowers and their Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate power and authority, and the legal right,
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to own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law, except to the extent that the failure to comply therewith
could not, individually or in the aggregate, have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. Each of the Borrowers has the corporate power and authority, and
the legal right, to make, deliver and perform the Loan Documents to which it is
a party and to borrow and obtain the other credit accommodations hereunder and
has taken all necessary corporate action to authorize such borrowings and other
credit accommodations on the terms and conditions of this Agreement and the
Revolving Credit Note and to authorize the execution, delivery and performance
of the Loan Documents to which it is a party. No consent or authorization of,
filing with, notice to or other act by or in respect of any Governmental
Authority or any other Person is required in connection with the borrowings,
issuance of Letters of Credit or creation of Acceptances hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which any of the Borrowers is a party. This Agreement has been,
and each other Loan Document to which it is a party will be, duly executed and
delivered on behalf of each of the Borrowers. This Agreement constitutes, and
each other Loan Document to which it is a party, will constitute, when executed
and delivered, the legal, valid and binding obligations of each of the
Borrowers enforceable against each of the Borrowers in accordance with its
terms.
3.5 No Legal Bar. The execution, delivery and
performance of the Loan Documents to which any of the Borrowers is a party, the
borrowings, issuance of Letters of Credit and creation of Acceptances hereunder
and the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of any of the Borrowers or of any of their Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of the Borrowers' or any of their Subsidiaries' respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Borrowers, threatened by or against any of the
Borrowers or any of their Subsidiaries or against any of the Borrowers' or any
of their Subsidiaries' respective properties or revenues (a) with respect to
any of the Loan Documents or any of the transactions contemplated hereby or
thereby, or (b) which could have a Material Adverse Effect.
3.7 No Default. None of the Borrowers nor any of their
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
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3.8 Ownership of Property; Liens. Each of the Borrowers
and its respective Subsidiaries has good record and marketable title in fee
simple to, or a valid leasehold interest in, all of its real property, and good
title to, or a valid leasehold interest in, all its other property, and none of
such property is subject to any Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. The Borrowers and each of
their Subsidiaries own, or are licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of
their respective businesses as currently conducted, except for those the
failure to own or license which could not have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor do the
Borrowers know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrowers and their Subsidiaries does not infringe
on the rights of any Person, except for such claims and infringements that,
individually or in the aggregate, do not have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrowers or any of their Subsidiaries could
reasonably be expected to have a Material Adverse Effect. None of ▇▇▇▇▇▇ or
Laminating, or any of their respective Subsidiaries, is subject to any
Requirement of Law or Contractual Obligation (including any provision of its
certificate or articles of incorporation or by-laws) which restricts its
ability to pay cash dividends to its respective shareholders.
3.11 Taxes. Each of the Borrowers and their Subsidiaries
has filed or caused to be filed all tax returns which, to the knowledge of the
Borrowers, are required to be filed, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of the Borrowers or their Subsidiaries, as the case may be); no
tax Lien has been filed, and, to the knowledge of the Borrowers, no claim is
being asserted, with respect to any such tax, fee or other charge.
3.12 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by the Bank, the Borrowers will furnish to
the Bank a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U.
3.13 ERISA. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects
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with the applicable provisions of ERISA and the Code. No termination of a
Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued
benefits (whether or not vested) under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. None of the Borrowers nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and none of the
Borrowers nor any Commonly Controlled Entity would become subject to any
liability under ERISA if any of the Borrowers or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent. The present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of the Borrowers and each Commonly Controlled
Entity for post retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA) does not, in the aggregate, exceed the assets under all such
Plans allocable to such benefits by an amount in excess of $0.
3.14 Investment Company Act; Other Regulations. None of
the Borrowers is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. None of the Borrowers is subject to regulation under any Federal
or State statute or regulation (other than Regulation X of the Board of
Governors of the Federal Reserve System) which limits its ability to incur
Indebtedness.
3.15 Subsidiaries. ▇▇▇▇▇▇ and Laminating are the only
Subsidiaries of Brookwood at the date hereof.
3.16 Purpose of Loans. The proceeds of the initial Loans
hereunder will be used (a) to repay the balance owed under the $13,500,000
revolving credit facility provided by The Chase Manhattan Bank to Brookwood
(the "Existing Facility") and (b) to pay transaction costs and expenses
incurred in connection with the closing of this Agreement. The proceeds of all
subsequent Loans will be used for the Borrowers' working capital and general
corporate purposes.
3.17 Environmental Matters. Except as set forth on
Schedule 3.17 attached hereto, (a) the facilities and properties owned, leased
or operated by the Borrowers or any of their Subsidiaries (the "Properties") do
not contain, and have not previously contained, any Materials of Environmental
Concern which (i) constitute or constituted a violation of, or (ii) could give
rise to liability under, any Environmental Law, except (x) in either case
insofar as such violation or liability, or any aggregation thereof, could not
have a Material Adverse Effect and (y) in the case of (ii) as necessary for the
operation of Business, provided that such Materials are managed in accordance
with all applicable Environmental Laws.
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(b) The Properties and all operations at the Properties
are in compliance with all applicable Environmental Laws, except for such
non-compliance as does not have a Material Adverse Effect, and there is no
Material of Environmental Concern on, at, under or about the Properties in
violation of any Environmental Laws.
(c) To the best of the Borrowers' knowledge, neither the
Borrowers nor any of their Subsidiaries, nor any other person or entity for
whose conduct they are or may be held responsible, have any accrued or
contingent liability under any Environmental Laws except insofar as such
liability could not have a Material Adverse Effect. The Borrowers and their
Subsidiaries have at all times applied for, obtained and presently have in
effect all permits, licenses, registrations, approvals, consents and
authorizations required by Environmental Laws in connection with the ownership
and operation of the Properties.
(d) None of the Borrowers nor any of their Subsidiaries
have received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with respect to any of the Properties or the business
operated by any Borrower or any of their Subsidiaries (the "Business"), nor do
the Borrowers have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that
could have a Material Adverse Effect.
(e) To the best of the Borrowers' knowledge, materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could give
rise to liability under, any Environmental Law. Neither the Borrowers nor any
of their Subsidiaries have arranged for disposal of Materials of Environmental
Concern from the Properties in violation of, or in a manner which could give
rise to liability, under any Environmental Laws. No Materials of Environmental
Concern have been generated, manufactured, refined, handled, recycled,
released, created a threat of release, treated, stored or disposed of in, on or
under any of the Properties in violation of, or in a manner that could give
rise to liability under, any applicable Environmental Law except insofar as any
such violation or liability referred to in this paragraph, or any aggregation
thereof, could not have a Material Adverse Effect.
(f) No judicial proceeding, governmental or
administrative action, citizen action or enforcement action or any other formal
or informal complaint or claim is pending or, to the knowledge of any of the
Borrowers, threatened, under any Environmental Law or relating to any Material
of Environmental Concern to which any of the Borrowers or any of their
Subsidiaries are or will be named as a party or respondent with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial directives or requirements outstanding under any Environmental Law
with respect to the Properties or the Business except insofar as such
proceeding, action, decree, order or other requirement, or any aggregation
thereof, could not have a Material Adverse Effect.
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(g) Neither the Borrowers nor any of their Subsidiaries
have (i) received any request for information, notice, demand letter or
administrative inquiry, relating to any Environmental Laws, or (ii) received
any communication indicating potential responsibility for response costs or
remediation with respect to a release or threatened release of any Material of
Environmental Concern, or (iii) been or are subject to any reporting, cleanup,
remediation or corrective action requirements under any Environmental Laws; and
the Borrowers and their Subsidiaries have no knowledge of any facts which could
form the basis of any of the above, except insofar as such conditions could not
have a Material Adverse Effect.
(h) To the best of the Borrowers' knowledge, there has
been no release or threat of release of Materials of Environmental Concern in,
on, under, about or from the Properties, or arising from or related to the
operations of any of the Borrowers or their Subsidiaries in connection with the
Properties or otherwise in connection with the Business, in violation of or in
a manner that could give rise to liability under Environmental Laws except
insofar as any such violation or liability referred to in this paragraph, or
any aggregation thereof, could not have a Material Adverse Effect.
(i) No lien has been (or with the passage of time and/or
the giving of notice could be) imposed on the Properties by any Governmental
Authority under any Environmental Laws in connection with any Material of
Environmental Concern.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans, Letters of Credit and
Acceptances. The agreement of the Bank to make the initial Loan, issue the
initial Letter of Credit or create the initial Acceptance requested to be made,
issued or created by it is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, issuance of such Letter of Credit or
creation of such Acceptance on the Closing Date, of the following conditions
precedent:
(a) Loan Documents. The Bank shall have received this
Agreement and each other Loan Document, executed and delivered by a duly
authorized officer of each Loan Party that is a party thereto.
(b) Material Agreements. The Bank shall have received
true and correct copies, certified as to authenticity by the Borrowers, of all
factoring agreements to which any of the Borrowers is a party and such other
documents or instruments as may be reasonably requested by the Bank, including,
without limitation, a copy of any debt instrument, security agreement or other
material contract to which any of the Borrowers or any of their Subsidiaries
may be a party, and the Bank shall have satisfactorily completed its review of
such documents.
(c) Borrowing Base Compliance Certificate. The Bank
shall have received an initial Borrowing Base Compliance Certificate as of a
recent date approved by the Bank.
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(d) Corporate Proceedings of the Borrowers. The Bank
shall have received a copy of the resolutions, in form and substance
satisfactory to the Bank, of the Board of Directors of each Borrower
authorizing (i) the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party, (ii) the borrowings and other
credit accommodations contemplated hereunder and (iii) the granting by it of
the Liens created pursuant to any of the Security Documents, certified by the
Secretary or an Assistant Secretary of such Borrower as of the Closing Date,
which certificate shall be in form and substance satisfactory to the Bank and
shall state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(e) Borrower Incumbency Certificates. The Bank shall
have received a certificate of each Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of such Borrower executing any Loan
Document on behalf of such Borrower, satisfactory in form and substance to the
Bank, executed by the President or any Vice President and the Secretary or any
Assistant Secretary of such Borrower.
(f) Corporate Proceedings of the Parent. The Bank shall
have received a copy of the resolutions, in form and substance satisfactory to
the Bank, of the Board of Directors of the Parent authorizing (i) the
execution, delivery and performance of the Loan Documents to which the Parent
is a party and (ii) the granting by it of the Liens created pursuant to the
Parent Pledge Agreement, certified by the Secretary or an Assistant Secretary
of the Parent as of the Closing Date, which certificate shall be in form and
substance satisfactory to the Bank and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(g) Parent Incumbency Certificate. The Bank shall have
received a certificate of the Parent, dated the Closing Date, as to the
incumbency and signature of the officers of the Parent executing any Loan
Document on behalf of the Parent, satisfactory in form and substance to the
Bank, executed by the President or any Vice President and the Secretary or any
Assistant Secretary of the Parent.
(h) Corporate Documents. The Bank shall have received
true and complete copies of the certificate or articles of incorporation and
by-laws of each Loan Party, certified as of the Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of such Loan
Party.
(i) Consents, Licenses and Approvals. The Bank shall
have received a certificate of a Responsible Officer of each Borrower (i)
attaching copies of all consents, authorizations and filings referred to in
subsection 3.4, and (ii) stating that such consents, licenses and filings are
in full force and effect, and each such consent, authorization and filing shall
be in form and substance satisfactory to the Bank.
(j) Repayment of Existing Indebtedness. The Borrowers
shall deliver evidence that the principal of and interest on, and all other
amounts owing in respect of the Indebtedness (including, without limitation,
any contingent or other amounts payable in respect
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of letters of credits or banker's acceptances, or arising from the Existing
Facility) indicated on Schedule 4.1(j) hereto that is to be repaid on the
Closing Date shall have been (or shall be simultaneously) paid in full or, with
respect to outstanding letters of credit and banker's acceptances, indemnified
against in a manner satisfactory to the Bank (including by the Bank issuing an
indemnity in favor of the bank obligated on such letter of credit or banker's
acceptance and reserving against such indemnity obligation under the Borrowing
Base), that any commitments to extend credit under the agreements relating to
such Indebtedness shall have been canceled or terminated and that all Guarantee
Obligations in respect of, and all Liens securing, any such Indebtedness shall
have been released. In addition, the Bank shall have received from any Person
holding any Lien securing any such Indebtedness such Uniform Commercial Code
termination statements, mortgage releases or other instruments, in each case in
proper form for recording, as the Bank shall have requested to release and
terminate of record the Liens securing such Indebtedness.
(k) Fees. The Bank shall have received from the
Borrowers on the Closing Date a closing fee of $52,500.
(l) Legal Opinions. The Bank shall have received the
executed legal opinions of ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel to the Borrowers, and
Jenkens & ▇▇▇▇▇▇▇▇▇, counsel to the Parent, substantially in the form of
Exhibit I-1 and I-2, respectively. Such legal opinions shall cover such other
matters incident to the transactions contemplated by this Agreement as the Bank
or its counsel may reasonably require.
(m) Pledged Stock; Stock Powers. The Bank shall have
received the certificates representing the shares pledged pursuant to the
Parent Pledge Agreement and the Brookwood Pledge Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof.
(n) Actions to Perfect Liens. The Bank shall have
received evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary or, in
the opinion of the Bank, desirable to perfect the Liens created by the Security
Documents shall have been completed.
(o) Lien Searches. The Bank shall have received the
results of a recent search by a Person satisfactory to the Bank of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to personal property of any of the Borrowers, and the results of such
search shall be satisfactory to the Bank.
(p) Audit. The Bank shall have received copies of an
audit, in form and substance satisfactory to it, of the Receivables and
Inventory of the Borrowers, prepared by an auditing firm satisfactory to the
Bank.
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(q) Appraisals. The Bank shall have received an
appraisal, in form and substance satisfactory to it, of all Equipment of the
Borrowers, prepared by an appraisal firm satisfactory to the Bank.
(r) No Material Adverse Change. (i) Since July 31,
1995, there shall not have occurred (x) any material adverse change in the
business, operations, property, condition (financial or otherwise), results of
operations or prospects of Brookwood and its Subsidiaries taken as a whole, (y)
any material damage or destruction to any of the Collateral or any material
depreciation in the value thereof and (z) any event, condition or state of
facts which would reasonably be expected to have a Material Adverse Effect and
(ii) no representations made or information supplied to the Bank shall have
been proven to be inaccurate or misleading in any material respect.
(s) Insurance. The Bank shall have received evidence in
form and substance satisfactory to it that all of the requirements of
subsection 5.5 and Section 4.3 of the Security Agreement shall have been
satisfied.
(t) Financial Reports. The Bank shall have received all
such financial statements, projections and other information from the Borrowers
as the Bank shall reasonably request, and which shall be in all respects
satisfactory to the Bank.
(u) Environmental Liabilities. The Bank shall have
received all environmental audits, reports, opinions, certificates and other
similar documents from the Borrowers as the Bank shall reasonably request, all
in form and substance satisfactory to the Bank, and the Bank shall be
satisfied, in its sole and absolute discretion, with the amount and nature of
all potential, contingent and fixed environmental liabilities of the Borrowers
and their Subsidiaries.
(v) Tax Sharing Agreements. The Bank shall have received
copies of all tax sharing agreements to which any Borrower is a party and shall
be satisfied in its sole and absolute discretion with all of the terms and
conditions contained therein.
(w) Other Documents; Due Diligence. The Bank shall have
received such other documents, reports, approvals or consents as it may have
reasonably requested and shall have otherwise completed its due diligence in a
manner satisfactory to it.
4.2 Conditions to Each Loan. The agreement of the Bank to
make any Loan, issue any Letter of Credit or create any Acceptance requested to
be made, issued or created by it on any date (including, without limitation,
its initial Loan, Letter of Credit or Acceptance) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrowers in or pursuant to
the Loan Documents shall be true and correct in all material respects
on and as of such date as if made on and as of such date.
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(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to
the Loan, Letter of Credit or Acceptance requested to be made, issued
or created on such date.
(c) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be satisfactory in form and substance
to the Bank and its counsel, and the Bank shall have received such
other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
Each borrowing and each request for a Letter of Credit or Acceptance by any of
the Borrowers hereunder shall constitute a representation and warranty by such
Borrower as of the date thereof that the conditions contained in this
subsection have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrowers hereby agree that, so long as the Commitment
remains in effect or any amount is owing to the Bank hereunder or under any
other Loan Document, the Borrowers shall, and shall cause (except in the case
of delivery of financial information, reports and notices) each of their
Subsidiaries to:
5.1 Financial Statements. Furnish to the Bank:
(a) as soon as available, but in any event within 120
days after the end of each fiscal year of the Borrowers, a copy of the
consolidated and consolidating balance sheets of Brookwood and its
consolidated Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income and retained
earnings and of cash flows for such year, setting forth in each case
in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte &
Touche or other independent certified public accountants of nationally
recognized standing acceptable to the Bank; and
(b) as soon as available, but in any event not later than
60 days after the end of each of the first three quarterly periods of
each fiscal year of the Borrowers, the unaudited consolidated and
consolidating balance sheets of the Brookwood and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated and consolidating statements of income and retained
earnings and of cash flows of each of Brookwood and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by the
chief financial officer of Brookwood as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2 Certificates; Other Information. Furnish to the
Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a) and (b), a certificate of
the chief financial officer of Brookwood, on behalf of each Borrower
and its Subsidiaries (i) stating that, to the best of such officer's
knowledge, each Borrower and its Subsidiaries have observed or
performed all of their covenants and other agreements, and satisfied
every applicable condition, contained in this Agreement, the Revolving
Credit Note and the other Loan Documents to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge of
any Default or Event of Default, except as specified in such
certificate, (ii) showing in detail as of the end of the related
fiscal period the figures and calculations supporting such statement
in respect of the financial covenants contained in subsection 6.1,
(iii) if not specified in the financial statements delivered pursuant
to subsection 5.1, specifying on a consolidated basis the aggregate
amount of interest paid or accrued by each Borrower and its
Subsidiaries, and the aggregate amount of depreciation and
amortization charged on the books of each Borrower and its
Subsidiaries, during such fiscal period and (iv) listing all
Indebtedness (other than Indebtedness hereunder) in each case incurred
since the date of the previous consolidated balance sheet of Brookwood
delivered pursuant to subsection 5.1(a) or (b);
(b) not later than thirty days prior to the end of each
fiscal year of the Borrowers, a copy of the projections by each
Borrower of the operating budget and cash flow budget of such Borrower
and its Subsidiaries, such projections to be provided separately for
each such entity for the succeeding fiscal year on a month-by-month
basis, and to be accompanied by a certificate of the chief financial
officer of Brookwood, on behalf of each Borrower and its Subsidiaries,
to the effect that such projections have been prepared on the basis of
sound financial planning practice and that such officer has no reason
to believe they are incorrect or misleading in any material respect;
(c) as soon as practicable and in any event within 30
days after the end of each month, a Borrowing Base Compliance
Certificate showing the Borrowing Base as of the close of business on
the last day of the immediately preceding accounting month, each such
Borrowing Base Compliance Certificate to be certified as complete and
correct on behalf of the Borrowers by the chief financial officer of
Brookwood, on behalf of each Borrower and its Subsidiaries, and such
other supporting documentation and additional reports with respect to
the Borrowing Base as the Bank shall reasonably request;
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(d) within five days after the same are sent, copies of
all financial statements and reports which Brookwood sends to its
stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Borrowers or the Parent
may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority;
(e) as soon as available, but in no event later than 30
days after the end of each fiscal quarter of the Borrowers, accounts
receivable aging reports for each Borrower, certified by the chief
financial officer of Brookwood on behalf of such Borrower and its
Subsidiaries as being fairly stated in all material respects;
(f) at the request of the Bank, which request shall be
made not more often than once per calendar year, a copy of an audit,
in form and substance satisfactory to the Bank, of the Receivables and
Inventory of the Borrowers, prepared by an auditing firm satisfactory
to the Bank;
(g) at the request of the Bank, which request shall be
made not more often than once per calendar year, a copy of an
appraisal, in form and substance satisfactory to the Bank, of all
Equipment of the Borrowers, prepared by an appraisal firm satisfactory
to the Bank; and
(h) promptly, such additional financial and other
information, including annual management letters from the Borrowers'
independent accountants, as the Bank may from time to time reasonably
request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the applicable Borrower or Subsidiary.
5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted by it
and preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except
as otherwise permitted pursuant to subsection 6.5; and comply with all
Contractual Obligations and Requirements of Law, except to the extent that
failure to comply therewith could not, individually or in the aggregate, have a
Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working order and
condition; maintain with financially sound and reputable insurance companies
insurance on all its property, including all of the Collateral, in at least
such amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same
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general area by companies engaged in the same or a similar business; and
furnish to the Bank, upon written request, full information as to the insurance
carried.
5.6 Inspection of Property; Books and Records;
Discussions. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of the Bank to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of the
Borrowers and their Subsidiaries with officers and employees of the Borrowers
and their Subsidiaries and with Brookwood's independent certified public
accountants.
5.7 Notices. Promptly give notice to the Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of any of the Borrowers or any of their
Subsidiaries or (ii) litigation, investigation or proceeding which may
exist at any time between any of the Borrowers or any of their
Subsidiaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could have a
Material Adverse Effect;
(c) any litigation or proceeding affecting any of the
Borrowers or any of their Subsidiaries in which the amount involved is
$100,000 or more and not covered by insurance or in which injunctive
or similar relief is sought;
(d) the following events, as soon as possible and in a
any event within 30 days after any of the Borrowers knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or any of the Borrowers or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan; and
(e) any material adverse change in the business,
operations, property, condition (financial or otherwise), results of
operations or prospects of the Borrowers and their Subsidiaries taken
as a whole which could have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action such Borrower proposes to take with respect
thereto.
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5.8 Environmental Laws. (a) Comply with, and ensure
compliance by all tenants and subtenants and contractors and subcontractors
retained by the Borrowers, with all applicable Environmental Laws and obtain
and comply with and maintain, and ensure that all tenants and subtenants and
contractors and subcontractors retained by the Borrowers, if any, obtain and
comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws, except to
the extent that failure to do so could not have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies,
sampling testing, and reporting, and all remedial, removal and other actions
required of the Borrowers or any of their Subsidiaries under Environmental Laws
and promptly comply with all lawful orders and directives of and agreements
with all Governmental Authorities issued to the Borrowers or to which the
Borrowers are a party regarding Environmental Laws, except to the extent that
the same are being contested in good faith by appropriate proceedings and the
pendency of such proceedings could not have a Material Adverse Effect.
5.9 Subsidiary Guarantee. Cause any Subsidiary of any
Borrower hereafter acquired or formed to, jointly and severally with all other
such Subsidiaries, guarantee the payment of all principal, interest, fees and
other Obligations of the Borrowers under the Loan Documents pursuant to a
Subsidiary Guarantee to be executed and delivered by such Subsidiary.
SECTION 6. NEGATIVE COVENANTS
The Borrowers hereby agree that, so long as the Commitment
remains in effect or any amount is owing to the Bank hereunder or under any
other Loan Document, none of the Borrowers shall, and shall not permit any of
their respective Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Tangible Net Worth.
Permit Consolidated Tangible Net Worth at any time during any period
set forth below to be less than the amount set forth below opposite
such period:
Period Amount
------ ------
Closing - 12/31/97 $19,000,000
1/1/98 and thereafter $20,000,000
(b) Consolidated Total Liabilities to Consolidated
Tangible Net Worth. Permit the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth at any time to be
greater than 1.25:1.00.
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(c) Consolidated EBITDA to Consolidated Fixed Charges.
Permit the ratio of Consolidated EBITDA to Consolidated Fixed Charges
for (i) the period of four consecutive fiscal quarters ending at
December 31, 1996 to be less than 0.80:1.00 or (ii) any period of four
consecutive fiscal quarters ending thereafter to be less than
1.00:1.00.
6.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness under this Agreement;
(b) Indebtedness of any Borrower to any Subsidiary and of
any wholly owned Subsidiary to any Borrower or any other Subsidiary;
(c) Indebtedness of any Borrower or any Subsidiary
incurred to finance the acquisition of fixed or capital assets
(whether pursuant to a loan, a Financing Lease or otherwise) in an
aggregate principal amount not exceeding as to all of the Borrowers
and their Subsidiaries $1,000,000 at any time outstanding;
(d) Indebtedness outstanding on the date hereof and
listed on Schedule 6.2.
6.3 Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of such Borrower's or its Subsidiary's property,
assets or revenues, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of
the applicable Borrower or Subsidiary, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue or which are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self- insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which do
not in any case materially detract from the value of the
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property subject thereto or materially interfere with the ordinary
conduct of the business of any of the Borrowers or their Subsidiaries;
(f) Liens in existence on the date hereof listed on
Schedule 6.3 securing Indebtedness permitted by subsection 6.2(d),
provided that no such Lien is spread to cover any additional property
after the Closing Date and that the amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness of the Borrowers and
their Subsidiaries permitted by subsection 6.2(c) incurred to finance
the acquisition of fixed or capital assets, provided that (i) such
Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by
such Indebtedness and (iii) the amount of Indebtedness secured thereby
is not increased; and
(h) Liens created pursuant to the Security Documents.
6.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof
and listed on Schedule 6.4;
(b) guarantees made in the ordinary course of business by
the Borrowers of obligations of any of their wholly owned
Subsidiaries, which obligations are otherwise permitted under this
Agreement; and
(c) any Subsidiary Guarantees required under the terms of
this Agreement.
6.5 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business, except:
(a) any Subsidiary may be merged or consolidated with or
into any Borrower (provided that such Borrower shall be the continuing
or surviving corporation) or with or into any one or more wholly owned
Subsidiaries of a Borrower (provided that the wholly owned Subsidiary
or Subsidiaries shall be the continuing or surviving corporation);
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to one or more Borrowers or any other wholly owned
Subsidiary; and
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(c) any acquisition (i) in the ordinary course of
business or (ii) to which the Bank, in its sole and absolute
discretion, consents.
6.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, Receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person other
than one or more Borrowers or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn-
out property in the ordinary course of business;
(b) the sale or other disposition of any property in the
ordinary course of business;
(c) the sale of Inventory in the ordinary course of
business;
(d) the sale or discount without recourse of Receivables
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(e) as permitted by subsection 6.5(b).
6.7 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of any Borrower or any
Subsidiary) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
any Borrower or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Borrower or any Subsidiary (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "Restricted
Payments"); provided that nothing herein shall prohibit ▇▇▇▇▇▇, Laminating or
any other wholly owned Subsidiary from making any Restricted Payments; and
provided, further, that (a) Brookwood may declare and make Restricted Payments
in respect of the fiscal year ending on December 31, 1996 in an aggregate
amount not to exceed $1,000,000 and (b) in respect of any fiscal year ending
after 1996, Brookwood may declare and make Restricted Payments subject to the
satisfaction of each of the following conditions on the date of such Restricted
Payment and after giving effect thereto:
(i) no Default shall have occurred and be continuing;
(ii) the aggregate amount of Restricted Payments made
during or in respect of any fiscal year of Brookwood may not exceed an
amount equal to 80% of the amount, if positive, of (x) the sum of (1)
consolidated net income (before extraordinary
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gains) of Brookwood and its Subsidiaries for the immediately preceding
fiscal year (the "Subject Year") plus (2) consolidated depreciation
and amortization expense of Brookwood and its Subsidiaries for the
Subject Year, minus (y) the sum of (1) Consolidated Capital
Expenditures for the Subject Year, plus (2) all scheduled payments
during the Subject Year in respect of Consolidated Indebtedness for
Borrowed Money;
(iii) the availability of the Commitment under the Borrowing
Base was not less than $500,000 at any time during the immediately
preceding 12-month period; and
(iv) the Bank shall have received the Borrowers' audited
financial statements for the relevant fiscal year at least ten
Business Days prior to the declaration or payment of any such
Restricted Payment.
6.8 Limitation on Consolidated Capital Expenditures.
Make or commit to make (by way of the acquisition of securities of a Person or
otherwise) any expenditure in respect of the purchase or other acquisition of
fixed or capital assets (excluding any such asset acquired in connection with
normal replacement and maintenance programs properly charged to current
operations) except for expenditures in the ordinary course of business which
shall result in Consolidated Capital Expenditures not exceeding, for any fiscal
year of Brookwood, the amount set forth below opposite such fiscal year:
Maximum Consolidated
Fiscal Year Capital Expenditures
----------- --------------------
Ended December 31, 1996 $1,300,000.00
Ended December 31, 1997 $1,500,000.00
Ended December 31, 1998 $1,750,000.00
Ended December 31, 1999 $1,750,000.00
provided, that the amount of Consolidated Capital Expenditures for any fiscal
year shall not be less than 75% of the amount set forth above for such fiscal
year.
6.9 Limitation on Investments, Loans and Advances. Make
any advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrowers or
their Subsidiaries for travel, entertainment and relocation expenses
in the ordinary course of business; and
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(d) investments by the Borrowers in their wholly-owned
Subsidiaries and investments by such Subsidiaries in the Borrowers and
in other wholly-owned Subsidiaries.
6.10 Limitation on Optional Payments and Modifications of
Debt Instruments. (a) Make any optional payment or prepayment on or
redemption or purchase of any Indebtedness or (b) amend, modify or change, or
consent or agree to any amendment, modification or change to any of the terms
of any such Indebtedness (other than any such amendment, modification or change
which would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon).
6.11 Limitation on Transactions with Affiliates. Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of a Borrower's or Subsidiary's business and (c) upon fair
and reasonable terms no less favorable to such Borrower or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate.
6.12 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by any Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by such Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Borrower or such
Subsidiary.
6.13 Limitation on Changes in Fiscal Year. Permit the
fiscal year of the Borrowers to end on a day other than December 31.
6.14 Limitation on Negative Pledge Clauses. Enter into
with any Person any agreement, other than (a) this Agreement, and (b) any
industrial revenue bonds, purchase money mortgages or Financing Leases
permitted by subsections 6.2(c) and 6.3(g) (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby), which
prohibits or limits the ability of any Borrower or Subsidiary to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired.
6.15 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrowers and their Subsidiaries are engaged on the
date of this Agreement or which are directly related thereto.
6.16 Limitation on Management Fees. Permit the aggregate
amount of management fees paid to any Affiliate to be in excess of $10,000 per
month or $120,000 per annum in the aggregate for all of the Borrowers and their
Subsidiaries.
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6.17 Limitation on Receivables From Affiliates. Permit
Receivables due to any Borrower or Subsidiary from any Affiliate (excluding
intercompany items among the Borrowers and their wholly-owned Subsidiaries) to
exceed $100,000 in the aggregate for all of the Borrowers and their
Subsidiaries at any one time.
6.18 Limitation on Tax Sharing Agreements. Enter into any
tax sharing agreements or similar arrangements with the Parent or any Affiliate
or any amendment thereto without the prior written consent of the Bank.
6.19 Amendments to Certificate of Incorporation.
Brookwood shall not amend its Certificate of Incorporation, including, without
limitation, any amendment to the terms of its Series A Cumulative Preferred
Stock, without the prior written consent of the Bank.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any
Loan, or any L/C Obligation, when due in accordance with the terms
hereof; or the Borrowers shall fail to pay any interest on any Loan,
or any other amount payable hereunder, including, without limitation,
any fees, commissions or expenses, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or
(b) Any representation or warranty made or deemed made by
any Borrower or any other Loan Party herein or in any other Loan
Document or which is contained in any certificate, document or
financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made; or
(c) Any Borrower or any other Loan Party shall default in
the observance or performance of any agreement contained in Section 6
or in any Security Document; or
(d) Any Borrower or any other Loan Party shall default in
the observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or
(e) Any Borrower or any Subsidiary shall (i) default in
any payment of principal of or interest on any Indebtedness (other
than the Loans) or in the payment of any Guarantee Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee
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Obligations in respect of which such default or defaults shall have
occurred is at least $100,000; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition shall exist, the effect of which default or
other event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Guarantee Obligation (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving
of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(f) (i) Any Borrower or any Subsidiary shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of
a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or any
Borrower or any Subsidiary shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any
Borrower or any Subsidiary any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against any Borrower or any
Subsidiary any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry
of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) any Borrower or any Subsidiary shall take any
action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any Borrower or any Subsidiary shall generally
not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the
Code), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of
any Borrower or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Bank, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
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ERISA, (v) a Borrower or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Bank, be likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could have
a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against the Borrowers or their Subsidiaries involving in the aggregate
a liability (not paid or fully covered by insurance) of $100,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) Any Security Document shall cease, for any reason, to
be in full force and effect, or any Borrower or any other Loan Party
which is a party to any Security Document shall so assert, or the Lien
created by any Security Document shall cease to be enforceable and of
the same effect and priority purported to be created thereby; or
(j) Any Subsidiary Guarantee shall cease, for any reason,
to be in full force and effect or any Guarantor shall so assert; or
(k) (i) Any Person or "group" (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended) (A) shall have acquired beneficial ownership of 20% or more
of any outstanding class of Capital Stock having ordinary voting power
in the election of directors of any Borrower or (B) shall obtain the
power (whether or not exercised) to elect a majority of any Borrower's
directors or (ii) the Board of Directors of any Borrower shall not
consist of a majority of Continuing Directors; "Continuing Directors"
shall mean the directors of the Borrowers on the Closing Date and each
other director, if such other director's nomination for election to
the Board of Directors of a Borrower is recommended by a majority of
the then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section, automatically the
Commitment shall immediately terminate and the Loans and outstanding L/C
Obligations and Acceptances hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement shall immediately become due and
payable, and (B) if such event is any other Event of Default, either or both of
the following actions may be taken: (i) the Bank may, by notice to Brookwood
declare the Commitment to be terminated forthwith, whereupon the Commitment
shall immediately terminate; and (ii) the Bank may, by notice to Brookwood, (A)
declare the Loans (with accrued interest thereon) and outstanding Acceptances
hereunder and all other amounts owing under this Agreement to be due and
payable forthwith, whereupon the same shall immediately become due and payable,
and (B) declare all or a portion of the obligations of the Borrowers in respect
of the Letters of Credit, although contingent and unmatured, to be due and
payable forthwith, whereupon the same shall immediately become due and payable
and/or demand that
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the Borrowers discharge any or all of the obligations supported by the L/C
Obligations by paying or prepaying any amount due or to become due in respect
of such obligations. All payments under this Section 7 on account of undrawn
Letters of Credit shall be made by the Borrowers directly to the cash
collateral account established by the Bank pursuant to subsection 2.8(c) for
such purpose for application to the Borrowers' reimbursement obligations under
subsection 2.5, with the balance, if any, to be applied to the Borrowers' other
obligations under this Agreement as the Bank shall determine. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. This Agreement is intended
by the Borrowers and the Bank to be the final, complete, and exclusive
expression of the agreement among them. This Agreement supersedes any and all
prior oral or written agreements relating to the subject matter hereof and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no oral agreements between the parties.
No modification, rescission, waiver, release, or amendment of any provision of
this Agreement shall be made, except by a written agreement signed by the
Borrowers and a duly authorized officer of the Bank. No act, failure or delay
by the Bank shall constitute a waiver of any of its rights and remedies. No
single or partial waiver by the Bank of any provision of this Agreement or any
other Loan Document, or of any breach or default hereunder or thereunder, or of
any right or remedy which the Bank may have, shall operate as a waiver of any
other provision, breach, default, right or remedy or of the same provision for
any breach, default, right or remedy on a future occasion. No waiver by the
Bank shall affect its rights to require strict performance of this Agreement.
8.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by facsimile transmission), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or
three (3) days after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when received, addressed as follows in the case of the
Borrowers and the Bank, or to such other address as may be hereafter notified
by the respective parties hereto:
The Borrowers: Brookwood Companies Incorporated
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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The Bank: The Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Bank pursuant to
subsection 2.2, 2.3, 2.4, 2.6, 2.7, 2.9, 2.11, or 2.24 shall not be effective
until received.
8.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Bank, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
8.5 Payment of Expenses and Taxes. The Borrowers jointly
and severally agree (a) to pay or reimburse the Bank for all its out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Bank, (b) to pay or
reimburse the Bank for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in- house counsel) to the Bank, (c) to pay, indemnify, and hold the Bank
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent
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under or in respect of, this Agreement, the other Loan Documents and any such
other documents, and (d) to pay, indemnify, and hold the Bank harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including, without limitation, any of the foregoing
relating to the (i) the release, threatened release, presence or migration of
any Materials of Environmental Concern in, on, under or about the Properties
during, or otherwise resulting from, the Borrowers' ownership or operation of
the Properties or (ii) any violation of or liability for costs under any
Environmental Laws resulting directly or indirectly from the Borrowers' or any
of their Subsidiaries' operations (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the Borrowers
shall have no obligation hereunder to the Bank with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the
Bank. The agreements in this subsection shall survive repayment of the Loans
and all other amounts payable hereunder.
8.6 Successors and Assigns; Participation and
Assignments. (a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Bank, and their respective successors and
assigns, except that the Borrowers may not assign or transfer any of their
rights or obligations under this Agreement without the prior written consent of
the Bank.
(b) The Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities (the "Participants") participating
interests in any Loan, any L/C Obligation or any Acceptance owing to the Bank,
any Commitment of the Bank or any other interest of the Bank hereunder and
under the other Loan Documents. In the event of any such sale by the Bank of a
participating interest to a Participant, the Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, the
Bank shall remain solely responsible for the performance thereof, the Bank
shall remain the holder of any such Loan, L/C Obligation or Acceptance for all
purposes under this Agreement and the other Loan Documents, and the Borrowers
shall continue to deal solely and directly with the Bank in connection with the
Bank's rights and obligations under this Agreement and the other Loan
Documents. The Borrowers agree that if amounts outstanding under this
Agreement are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement, provided
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Bank the proceeds thereof as provided
in subsection 8.7(a) as fully as if it were the Bank hereunder. The Borrowers
also agree that each Participant shall be entitled to the benefits of
subsections 2.23, 2.24, 2.25 (Requirements of Law, Taxes and Indemnity) with
respect to its participation in the Commitment and the Loans, L/C Obligations
and Acceptances outstanding from time to time as if it was a Bank; provided
that, in the case of subsection 2.24 (Taxes), such Participant shall have
complied with the requirements of said subsection and provided, further, that
no
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Participant shall be entitled to receive any greater amount pursuant to any
such subsection than the Bank would have been entitled to receive in respect of
the amount of the participation transferred by the Bank to such Participant had
no such transfer occurred.
(c) The Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, with the
consent of Brookwood, which shall not be unreasonably withheld, at any time and
from time to time assign to another bank or financial institution (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit J executed by such Assignee, and delivered
to the Bank for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of the Bank
hereunder with a portion of the Commitment as set forth therein, and (y) the
Bank shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of the Bank's
rights and obligations under this Agreement, the Bank shall cease to be a party
hereto).
(d) The Bank, on behalf of the Borrowers, shall maintain
at the address of the Bank referred to in subsection 8.2 a copy of each
Assignment and Acceptance and a register (the "Register") for the recordation
of the principal amounts of the Loans and other obligations hereunder owing to
the Bank and any Assignees from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers and
the Bank may treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. The Register shall be available for inspection by the
Borrowers at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by the Bank and an Assignee, the Bank shall on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such recordation to the Borrowers.
(f) The Borrowers authorize the Bank to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in the Bank's possession concerning the
Borrowers and their Affiliates which has been delivered to the Bank by or on
behalf of the Borrowers pursuant to this Agreement or which has been delivered
to the Bank by or on behalf of the Borrowers in connection with the Bank's
credit evaluation of the Borrowers and its Affiliates prior to becoming a party
to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and other obligations
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hereunder relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by the Bank of any Loan or the Revolving
Credit Note to any Federal Reserve Bank in accordance with applicable law.
8.7 Adjustments; Set-off. In addition to any rights and
remedies of the Bank provided by law, the Bank shall have the right, without
prior notice to the Borrowers, any such notice being expressly waived by the
Borrowers to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrowers hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Bank or any branch or
agency thereof to or for the credit or the account of the Borrowers. The Bank
agrees promptly to notify the Borrowers after any such set-off and application
made by the Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
8.8 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
8.9 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
8.10 Integration. This Agreement and other Loan Documents
represent the agreement of the Borrowers and the Bank with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Bank relative to subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES.
8.12 Submission To Jurisdiction; Waivers. Each Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive
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general jurisdiction of the courts of the State of New York located in
New York City, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Borrower at the address set forth in subsection 8.2
or at such other address of which the Bank shall have been notified
pursuant there to;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
8.13 Acknowledgments. Each Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) the Bank has no fiduciary relationship with or duty
to the Borrowers arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the
Bank, on one hand, and the Borrowers, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Bank and the Borrowers.
8.14 WAIVERS OF JURY TRIAL. THE BORROWERS AND THE BANK
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.15 Confidentiality. The Bank agrees to keep
confidential any written or oral information (a) provided to it by or on behalf
of any of the Borrowers or any of their
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Subsidiaries pursuant to or in connection with this Agreement or (b) obtained
by the Bank based on a review of the books and records of the Borrowers or any
of their Subsidiaries; provided that nothing herein shall prevent the Bank from
disclosing any such information (i) to any Transferee which receives such
information having been made aware of the confidential nature thereof, (ii) to
its employees, directors, agents, attorneys, accountants and other professional
advisors, (iii) upon the request or demand of any Governmental Authority having
jurisdiction over the Bank, (iv) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (v) which has been publicly disclosed other than in breach
of this Agreement, or (vi) in connection with the exercise of any remedy
hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
THE BORROWERS:
-------------
BROOKWOOD COMPANIES INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: V.P. Finance
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
BROOKWOOD LAMINATING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
THE BANK:
--------
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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